SOUTH PORTLAND — Officials from Scarborough and Cape Elizabeth will meet with their South Portland counterparts on Feb. 17 to discuss a possible partnership in a municipal energy company.
Since last summer, South Portland has been studying creation of a municipal energy distribution company that would purchase electricity at wholesale rates from the ISO-New England grid.
The city originally estimated the endeavor would save residential and small commercial clients up to 15 percent on their electrical bills. But Erik Carson, South Portland assistant city manager and economic development director, said clients would probably save between eight and 10 percent.
Carson said establishment of a municipal energy company is a complex regulatory process, which would require an initial investment from each community involved.
Carson estimated that it would cost between $200,000 and $250,000 for South Portland to start the company on its own, and suggested that similar investments could be needed from other communities.
“I’m sure it will be be more than ($250,000),” he said. “And the complexity grows probably exponentially” by adding other communities.
Carson said, just with as any business, there would be start-up costs, and the energy company would likely require customers to sign at least a one year contract to purchase electricity.
Customers would still receive their electric bills from Central Maine Power Co., which would still charge a transmission and delivery fee.
Although he was still working out details for the presentation, Carson said a minimum number of customers would have to sign on for the endeavor to be successful.
Once the initial investment is recovered, he said the communities would create an enterprise account for future profits to take the pressure off the general funds of each municipality.
Carson said overhead costs would not necessarily decrease with more communities, and the savings to each customer would not necessarily increase.
But he said a more regional approach is being explored because the communities share common business and residential interests.
“A CEO who lives in Cape may have a business in South Portland or Scarborough,” he said. “We need to continue to find ways for collaboration. The three communities are kind of kindred spirits.”
Officials in Cape Elizabeth and Scarborough said they are interested in learning more about the project.
Cape Elizabeth Town Manager Michael McGovern said it is too early in the process to discuss whether the town is interested in joining the effort.
“It’s not without risk,” McGovern said.
Cape Elizabeth Town Council Chairman David Sherman said he wants to make sure residents not only save money, but receive the same level of customer service as they do now.
“The council is obviously in the early stages of assessing this idea, so it’s a bit early for me to determine for myself whether this makes sense or not,” Sherman said.
Scarborough Town Council Chairwoman Judy Roy said teaming with neighboring communities to establish an energy supply company is one of several initiatives being considered by the town.
South Portland Mayor Rosemarie De Angelis said she would like to see examples where this type of program has worked in other parts of the country before deciding to spend money on the project.
“We have a bottom line responsibility to constituents – to the residents of this city – to not take unreasonable risks,” she said.
The Feb. 17 meeting is at 7 p.m. at Cape Elizabeth Town Hall.
Randy Billings can be reached at 781-3661 ext. 100 or firstname.lastname@example.org